American Airlines executives said Friday morning that they expect the continued ground of its Boeing 737 Max fleet to cost the company $350 million in 2019 income. The grounding as well as other factors cost the Southwest Airlines more than $200 million in revenue.
Southwest and American Airlines, the two U.S. airlines that owned 737 Max 8 aircraft when they were grounded on March 13, both warned investors of extended losses due to the crisis. By Aaron Gregg and Aaron Gregg Reporter covering the defense industry and government contractors.
In a quarterly earnings report released Thursday, Southwest reported revenue of $5.1 billion for the first three months of 2019, reflecting a 4.1 percent increase compared with the same period a year ago. Representatives from the airline’s pilot union have asked the company for flight simulators specific to the 737 Max, but have not yet clarified whether they see them as an essential requirement.In the meantime, the global network of companies that build their business around 737 Max production is anxiously awaiting an FAA order that would allow delivery of the planes, with little indication as to how much long they will have to wait.
“Flight cancellations and lower capacity [are] putting pressure on our non-fuel unit costs, but we continue to focus on strict cost control and being nimble,” said Tammy Romo, Southwest Airlines chief financial officer. “We continue to expect solid margins in 2019 with the opportunity to deliver stellar returns on capital.
Southwest spent more money on fuel in part because of the 737 Max grounding, executives said Thursday; the Max jet was designed to be more fuel-efficient than its predecessors. And they face the logistical challenge of finding seats for customers whose flights were canceled.
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